In a major relief, the textile ministry may soon announce simplified norms under the Amended Technology Funds Scheme (ATUFS) for players in textile and intermediaries across the value chain.
Following severe difficulties faced by textile players to avail benefits under ATUFS due to its complicated structure, a steering committee under the aegis of senior textile ministry officials held its meeting on Thursday to discuss modalities for its simplifications. The industry hopes that the ministry would soon convene a meeting of senior industry officials including their representative bodies to make the scheme industry-friendly.
The complications can be gauged from the fact that the textile ministry has received 8160 applications seeking benefits under ATUFS since its launch in January 2016 of which the government has issued unique identity numbers (UIDs) for 6400 projects. Out of the annual budgetary allocations of Rs 23 billion and claim sought for around Rs 18 billion, the government has released a meagre amount of Rs 3.5 billion.
“Because of this massive fund blockage with the government, many units are facing financial strain for the purchase of raw material to feed their plants. Since the fund meant for speedy release, companies had borrowed from financial institutions. Consequently, they are paying interest on the fund blocked with the government. So, it is a double blow for the entire textile sector and its value chain,” said K Selvaraju, Southern India Mills’ Association (SIMA).
The Finance Minister in the Union Budget 2017-18 and 2018-19 had allocated an annual sum of Rs 23 billion for technology upgradation in the textile sector. But, the complicated structure of ATUFS has made it one of India’s least preferred subsidy schemes.
Textile units are facing a number of hardships to avail this benefit. For example, the overseas machinery suppliers should be enlisted in the suppliers’ list for which the government is asking for documents like ISO (International Organization for Standardization) certification which machinery suppliers find reluctance. Secondly, the government has introduced joint inspection by textile experts in financial institutions or industry associations.
Apart from the allocation of 16-digit MIC (machine identification code) number engraved on imported machinery, the government has included approval for all individual machinery mandatory required for the plant.
“The total fund allocation under ATUFS has been very low since its launch in January 2016,” said Sanjay Jain, Chairman, Confederation of Indian Textile Industry (CITI).
While announcing ATUFS, the government allocated Rs 178 billion of which Rs 51.5 billion was meant for ATUFS alone. The balance was scheduled for old TUFS including blackout period, revised TUFS (RTUFS), revised and restructured TUFS (RRTUFS) etc.
The textile industry has blamed manpower shortage at the Textile Commissioner’s office for joint inspection. The industry has recommended the textile ministry to set up a special task force to study the difficulties faced under ATUFS.
“We believe, the government would soon announce relaxations in ATUFS for ease of doing business in this sector for the benefit of textile sector,” said a senior industry official involved in dialogue with the government.
Meanwhile, India’s textiles and apparel exports jumped by a staggering 38 per cent in October due to growing demand from overseas. Led by the US, the largest importer of India’s clothing, the boom has been triggered by recovery in the global economy. Depreciating rupee helped boost realisations of textile, apparel exporters.
According to data compiled by the Ministry of Commerce, the country's textile and apparel exports stood at Rs 203.53 billion for October 2018 as against Rs 147.79 billion in the corresponding month last year. While overall textiles exports posted a jump of 28 per cent, shipment of apparel from the country shot up by 54 per cent in the month under consideration.
Being closely linked with the country's economy and employment generation, the increase in exports indicates a recovery in the global economy.